"When buying a home or refinancing, one of the biggest decisions you'll make is choosing between a 15-year and 30-year mortgage. Whether you're looking at homes for sale in Los Angeles, CA or exploring properties in Austin, TX , the loan term you choose can impact your monthly payments, interest costs, and long-term financial goals. In this Redfin article, we'll explain how 15-year and 30-year mortgages differ, including payment examples, and when each option makes the most sense."
"The main difference between a 15-year and 30-year mortgage is how long you have to pay off the loan. Because the loan is paid off in half the time, 15-year mortgages come with higher monthly payments, but you save significantly on interest and build equity much faster. How monthly payments and interest costs compare Even a slightly higher interest rate over a 30-year term can have a major impact on total interest paid."
A 15-year mortgage requires higher monthly payments because the loan is paid off in half the time. It produces substantial interest savings and faster equity buildup compared with a 30-year mortgage. Even a slightly higher interest rate over a 30-year term can greatly increase total interest paid. For example, on a $400,000 loan a 15-year term can save roughly $260,000 in interest; on a $250,000 loan it can save about $165,000. A 15-year loan suits borrowers with stable incomes who prioritize long-term savings and want to pay off their home sooner. A 30-year loan offers lower monthly payments and greater short-term flexibility but results in higher long-term interest costs.
Read at Redfin | Real Estate Tips for Home Buying, Selling & More
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